Hong Kong Fund Managers Bullish on City’s Leading Hub Status

(Bloomberg) -- Hong Kong money managers expect a spike in assets in the next five years, even as a crippling recession and political tension grip the Asian financial hub.

The Hong Kong Investment Funds Association is confident that the city will become the leading asset management hub in Asia, betting that its wealth connect program with the neighboring Guangdong province -- collectively known as the Greater Bay Area -- will help boost investment inflows from the mainland.

“We’re still confident that Hong Kong will become a major fund hub in Asia despite Covid and the social situation,” Bruno Lee, chairman of the association, said in a phone interview Wednesday. “Hong Kong is still one of the most competitive fund markets.”

Hong Kong Chief Executive Carrie Lam on Tuesday said she told Chinese officials the city should be transformed into a global hub for private wealth and a more prominent offshore Renminbi center, even amid concerns about the former British colony’s future as a financial center.

The fund investment association has proposed that residents within the area be allowed to purchase fund products via authorized entities in the city, and that investment caps be lifted. It also suggested that gains be repatriated back to the mainland, alleviating Beijing’s concern about capital flight. The proposals are still under review.

More than half of firms say assets under management will grow 11% to 30% by 2025, according to a survey by KPMG and the association. The survey and interviews with executives were done from November to January, before the onset of the pandemic and rising concerns over a new security law proposed by China.

“Hong Kong continues to be viewed as a leading asset management center,” Andrew Weir, global head of asset management and vice chairman of KPMG China said in a statement Tuesday. “The ability to capitalize on the significant opportunities related to the development of mainland China, technology and ESG will drive growth.”

About 79% of fund managers interviewed expect their assets under management originating from mainland China to grow by 10% in the next five years. Nearly a third expect assets to increase by 30% in the same period.

©2020 Bloomberg L.P.

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